Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Constitutes the Authority for Advance Rulings (Chairman + Vice-chairmen + revenue and law Members), prescribes qualifications, Benches, location (NCT Delhi) and the acting-Chairman mechanism; sub-section (1A) makes the Authority an appellate authority for Customs once the Customs Authority for Advance Rulings is appointed.
Sunset: Second proviso to s.245-O(1) lets the Central Government notify a date on which the Authority shall “cease to operate.” On constitution of the Board for Advance Rulings under s.245-OB (Finance Act, 2021), the income-tax advance-ruling function migrated from the Authority to the Board.
Status: Constitution/competence largely settled by Columbia Sportswear (nature of the forum); direct litigation on s.245-O itself is sparse — the live constitutional questions concern tribunal-member qualifications, addressed under s.245-OA. Candour rule applied to the machinery sub-sections.
Section 245-O is the constitutive provision. It requires the Central Government to set up an “Authority for Advance Rulings,” fixes its composition (a Chairman, and such number of Vice-chairmen, revenue Members and law Members as may be appointed), prescribes the qualifications for each office, provides for Benches constituted by the Chairman, locates the Authority in the National Capital Territory of Delhi, and — by sub-sections (6A)/(6B) — enables the senior-most Vice-Chairman to act as, or discharge the functions of, the Chairman on a vacancy or the Chairman’s incapacity.
The qualification matrix is deliberately judicial: the Chairman must have been a Judge of the Supreme Court, or a Chief Justice of a High Court, or a Judge of a High Court for at least seven years; a Vice-chairman must have been a Judge of a High Court. This judicial composition is what led the Supreme Court in Columbia Sportswear to characterise the body as a Tribunal exercising judicial power.
2. The Customs overlay — sub-sections (1) proviso and (1A)
The same Authority historically gave advance rulings under the Customs, Central Excise and Service-tax laws. The first proviso to sub-section (1) provides that the Authority ceases to act for Customs purposes once the Customs Authority for Advance Rulings is appointed under s.28EA of the Customs Act; sub-section (1A) then converts it into an Appellate Authority for Customs, while barring appeals against its own earlier Customs rulings. These provisions are administrative plumbing for the bifurcation of the direct- and indirect-tax advance-ruling machinery.
3. Migration to the Board for Advance Rulings
The second proviso to sub-section (1) empowers the Government to notify a date on which the Authority “shall cease to operate.” Reading this with s.245-OB (Board for Advance Rulings, inserted by Finance Act, 2021) and the consequential “Board for Advance Rulings” substitutions in ss.245P, 245R, 245S, 245T, 245U and 245V, the legislative design is a phased hand-over: the high-powered judicial Authority is replaced, for fresh income-tax applications, by departmental Boards (two officers of Chief-Commissioner rank), with the assessee’s safeguard relocated from the Authority’s judicial composition to a statutory appeal to the High Court (s.245W).
4. Litigation posture
Section 245-O itself has rarely been the direct subject of litigation; the constitutional debate about whether a forum performing judicial functions can be staffed and serviced consistently with judicial independence has played out around s.245-OA (which imports s.184 of the Finance Act, 2017) and the wider tribunal-reforms jurisprudence. Those authorities are collected under s.245-OA. For the character and reviewability of the Authority constituted under s.245-O, Columbia Sportswear remains the governing decision.
B. STATUTORY POSITION (verbatim text)
The text of section 245-O, as it stands in the Act (Finance Act, 2025 base text), is set out below.
245-O. (1) The Central Government shall constitute an Authority for giving advance rulings, to be known as "Authority for Advance Rulings":
Provided that the Authority shall cease to act as an Authority for Advance Rulings for the purposes of Chapter V of the Customs Act, 1962 (52 of 1962) on and from the date of appointment of the Customs Authority for Advance Rulings under section 28EA of that Act:
Provided further that the Authority so constituted shall cease to operate on and from such date as the Central Government may, by notification in the Official Gazette, appoint.
(1A) On and from the date of appointment of the Customs Authority for Advance Rulings referred to in the proviso to sub-section (1), the Authority shall act as an Appellate Authority, for the purpose of Chapter V of the Customs Act, 1962 (52 of 1962):
Provided that the Authority shall not admit any appeal against any ruling or order passed earlier by it in the capacity of the Authority for Advance Rulings in relation to any matter under Chapter V of the Customs Act, 1962 (52 of 1962) after the date of such appointment of the Customs Authority for Advance Rulings.
(2) The Authority shall consist of a Chairman and such number of Vice-chairmen, revenue Members and law Members as the Central Government may, by notification, appoint.
(3) A person shall be qualified for appointment as— (a) Chairman, who has been a Judge of the Supreme Court or the Chief Justice of a High Court or for at least seven years a Judge of a High Court; (b) Vice-chairman, who has been Judge of a High Court; (c) a revenue Member— (i) from the Indian Revenue Service, who is, or is qualified to be, a Member of the Board; or (ii) from the Indian Customs and Central Excise Service, who is, or is qualified to be, a Member of the Central Board of Excise and Customs, on the date of occurrence of vacancy; (d) a law Member from the Indian Legal Service, who is, or is qualified to be, an Additional Secretary to the Government of India on the date of occurrence of vacancy.
(4) The terms and conditions of service and the salaries and allowances payable to the Members shall be such as may be prescribed.
(5) The Central Government shall provide to the Authority with such officers and employees, as may be necessary, for the efficient discharge of the functions of the Authority under this Act.
(6) The powers and functions of the Authority may be discharged by its Benches as may be constituted by the Chairman from amongst the Members thereof.
(6A) In the event of the occurrence of any vacancy in the office of the Chairman by reason of his death, resignation or otherwise, the senior-most Vice-Chairman shall act as the Chairman until the date on which a new Chairman, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.
(6B) In case the Chairman is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Vice-Chairman shall discharge the functions of the Chairman until the date on which the Chairman resumes his duties.
(7) A Bench shall consist of the Chairman or the Vice-Chairman and one revenue Member and one law Member:
Provided that where the Authority is dealing with an application seeking advance ruling in any matter relating to this Act, the revenue Member of the Bench shall be such Member as referred to in sub-clause (i) of clause (c) of sub-section (3).
(8) The Authority shall be located in the National Capital Territory of Delhi and its Benches shall be located at such places as the Central Government may, by notification specify.
Editorial note: the second proviso to sub-section (1) (“cease to operate”) and sub-sections (6A)/(6B) reflect the staged transition to the Board for Advance Rulings. No statutory word is altered.
C. AUTHORITIES
Section 245-O is principally machinery; the governing authority on the constitution and character of the forum is Columbia Sportswear (collected at s.245N). The constitutional questions on member qualifications/independence are addressed under s.245-OA. Candour rule: there is no body of merits case law construing the individual machinery sub-sections of s.245-O, and none is invented.
Cluster 1 — Character and competence of the Authority
Columbia Sportswear Company v. DIT (2012) 346 ITR 161 (SC)
Held: The Authority constituted under s.245-O exercises judicial power and is a Tribunal under Arts. 136/227; its rulings are reviewable by the High Court and Supreme Court (see fuller note under s.245N).
Relevance: Definitive on what kind of body s.245-O creates.
Hyosung Corporation Korea, In re (2013) 357 ITR 123 (AAR)
Held: The Authority cannot adjudicate the vires of a statutory provision — a limit inherent in a body constituted under, and confined by, s.245-O.
Relevance: Fixes the competence ceiling of the s.245-O forum.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; no statutory word is altered. Chapter XIX-B (Advance Rulings, ss.245N–245W) was inserted by the Finance Act, 1993; the Authority for Advance Rulings was replaced, for fresh income-tax applications, by the Board for Advance Rulings (s.245-OB, Finance Act, 2021), with a statutory appeal to the High Court (s.245W) and the e-Advance Rulings Scheme, 2022. The Finance Act, 2026 makes NO amendment to any section of Chapter XIX-B. Rulings of the Authority for Advance Rulings are cited as the natural body of jurisprudence on this Chapter; Supreme Court and High Court decisions are flagged as such; there is virtually no Income-tax Appellate Tribunal authority on Chapter XIX-B (advance-ruling disputes travel to the High Court/Supreme Court, not the Tribunal), which is stated candidly rather than padded. Where a section has not been judicially construed, that is stated and the nearest governing authority is given. Citations are stated as reported and have been web-verified; the reader should consult the official report before filing. This material is for professional reference and is not legal advice.
CHAPTER XIX-B — ADVANCE RULINGS
Section 245-O — Authority for Advance Rulings
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Constitutes the Authority for Advance Rulings (Chairman + Vice-chairmen + revenue and law Members), prescribes qualifications, Benches, location (NCT Delhi) and the acting-Chairman mechanism; sub-section (1A) makes the Authority an appellate authority for Customs once the Customs Authority for Advance Rulings is appointed.
Sunset: Second proviso to s.245-O(1) lets the Central Government notify a date on which the Authority shall “cease to operate.” On constitution of the Board for Advance Rulings under s.245-OB (Finance Act, 2021), the income-tax advance-ruling function migrated from the Authority to the Board.
Finance Act, 2026: No amendment to section 245-O.
Status: Constitution/competence largely settled by Columbia Sportswear (nature of the forum); direct litigation on s.245-O itself is sparse — the live constitutional questions concern tribunal-member qualifications, addressed under s.245-OA. Candour rule applied to the machinery sub-sections.
A. SECTION COMMENTARY
1. What section 245-O does
Section 245-O is the constitutive provision. It requires the Central Government to set up an “Authority for Advance Rulings,” fixes its composition (a Chairman, and such number of Vice-chairmen, revenue Members and law Members as may be appointed), prescribes the qualifications for each office, provides for Benches constituted by the Chairman, locates the Authority in the National Capital Territory of Delhi, and — by sub-sections (6A)/(6B) — enables the senior-most Vice-Chairman to act as, or discharge the functions of, the Chairman on a vacancy or the Chairman’s incapacity.
The qualification matrix is deliberately judicial: the Chairman must have been a Judge of the Supreme Court, or a Chief Justice of a High Court, or a Judge of a High Court for at least seven years; a Vice-chairman must have been a Judge of a High Court. This judicial composition is what led the Supreme Court in Columbia Sportswear to characterise the body as a Tribunal exercising judicial power.
2. The Customs overlay — sub-sections (1) proviso and (1A)
The same Authority historically gave advance rulings under the Customs, Central Excise and Service-tax laws. The first proviso to sub-section (1) provides that the Authority ceases to act for Customs purposes once the Customs Authority for Advance Rulings is appointed under s.28EA of the Customs Act; sub-section (1A) then converts it into an Appellate Authority for Customs, while barring appeals against its own earlier Customs rulings. These provisions are administrative plumbing for the bifurcation of the direct- and indirect-tax advance-ruling machinery.
3. Migration to the Board for Advance Rulings
The second proviso to sub-section (1) empowers the Government to notify a date on which the Authority “shall cease to operate.” Reading this with s.245-OB (Board for Advance Rulings, inserted by Finance Act, 2021) and the consequential “Board for Advance Rulings” substitutions in ss.245P, 245R, 245S, 245T, 245U and 245V, the legislative design is a phased hand-over: the high-powered judicial Authority is replaced, for fresh income-tax applications, by departmental Boards (two officers of Chief-Commissioner rank), with the assessee’s safeguard relocated from the Authority’s judicial composition to a statutory appeal to the High Court (s.245W).
4. Litigation posture
Section 245-O itself has rarely been the direct subject of litigation; the constitutional debate about whether a forum performing judicial functions can be staffed and serviced consistently with judicial independence has played out around s.245-OA (which imports s.184 of the Finance Act, 2017) and the wider tribunal-reforms jurisprudence. Those authorities are collected under s.245-OA. For the character and reviewability of the Authority constituted under s.245-O, Columbia Sportswear remains the governing decision.
B. STATUTORY POSITION (verbatim text)
The text of section 245-O, as it stands in the Act (Finance Act, 2025 base text), is set out below.
245-O. (1) The Central Government shall constitute an Authority for giving advance rulings, to be known as "Authority for Advance Rulings":
Provided that the Authority shall cease to act as an Authority for Advance Rulings for the purposes of Chapter V of the Customs Act, 1962 (52 of 1962) on and from the date of appointment of the Customs Authority for Advance Rulings under section 28EA of that Act:
Provided further that the Authority so constituted shall cease to operate on and from such date as the Central Government may, by notification in the Official Gazette, appoint.
(1A) On and from the date of appointment of the Customs Authority for Advance Rulings referred to in the proviso to sub-section (1), the Authority shall act as an Appellate Authority, for the purpose of Chapter V of the Customs Act, 1962 (52 of 1962):
Provided that the Authority shall not admit any appeal against any ruling or order passed earlier by it in the capacity of the Authority for Advance Rulings in relation to any matter under Chapter V of the Customs Act, 1962 (52 of 1962) after the date of such appointment of the Customs Authority for Advance Rulings.
(2) The Authority shall consist of a Chairman and such number of Vice-chairmen, revenue Members and law Members as the Central Government may, by notification, appoint.
(3) A person shall be qualified for appointment as— (a) Chairman, who has been a Judge of the Supreme Court or the Chief Justice of a High Court or for at least seven years a Judge of a High Court; (b) Vice-chairman, who has been Judge of a High Court; (c) a revenue Member— (i) from the Indian Revenue Service, who is, or is qualified to be, a Member of the Board; or (ii) from the Indian Customs and Central Excise Service, who is, or is qualified to be, a Member of the Central Board of Excise and Customs, on the date of occurrence of vacancy; (d) a law Member from the Indian Legal Service, who is, or is qualified to be, an Additional Secretary to the Government of India on the date of occurrence of vacancy.
(4) The terms and conditions of service and the salaries and allowances payable to the Members shall be such as may be prescribed.
(5) The Central Government shall provide to the Authority with such officers and employees, as may be necessary, for the efficient discharge of the functions of the Authority under this Act.
(6) The powers and functions of the Authority may be discharged by its Benches as may be constituted by the Chairman from amongst the Members thereof.
(6A) In the event of the occurrence of any vacancy in the office of the Chairman by reason of his death, resignation or otherwise, the senior-most Vice-Chairman shall act as the Chairman until the date on which a new Chairman, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.
(6B) In case the Chairman is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Vice-Chairman shall discharge the functions of the Chairman until the date on which the Chairman resumes his duties.
(7) A Bench shall consist of the Chairman or the Vice-Chairman and one revenue Member and one law Member:
Provided that where the Authority is dealing with an application seeking advance ruling in any matter relating to this Act, the revenue Member of the Bench shall be such Member as referred to in sub-clause (i) of clause (c) of sub-section (3).
(8) The Authority shall be located in the National Capital Territory of Delhi and its Benches shall be located at such places as the Central Government may, by notification specify.
Editorial note: the second proviso to sub-section (1) (“cease to operate”) and sub-sections (6A)/(6B) reflect the staged transition to the Board for Advance Rulings. No statutory word is altered.
C. AUTHORITIES
Section 245-O is principally machinery; the governing authority on the constitution and character of the forum is Columbia Sportswear (collected at s.245N). The constitutional questions on member qualifications/independence are addressed under s.245-OA. Candour rule: there is no body of merits case law construing the individual machinery sub-sections of s.245-O, and none is invented.
Cluster 1 — Character and competence of the Authority
Columbia Sportswear Company v. DIT (2012) 346 ITR 161 (SC)
Held: The Authority constituted under s.245-O exercises judicial power and is a Tribunal under Arts. 136/227; its rulings are reviewable by the High Court and Supreme Court (see fuller note under s.245N).
Relevance: Definitive on what kind of body s.245-O creates.
Hyosung Corporation Korea, In re (2013) 357 ITR 123 (AAR)
Held: The Authority cannot adjudicate the vires of a statutory provision — a limit inherent in a body constituted under, and confined by, s.245-O.
Relevance: Fixes the competence ceiling of the s.245-O forum.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; no statutory word is altered. Chapter XIX-B (Advance Rulings, ss.245N–245W) was inserted by the Finance Act, 1993; the Authority for Advance Rulings was replaced, for fresh income-tax applications, by the Board for Advance Rulings (s.245-OB, Finance Act, 2021), with a statutory appeal to the High Court (s.245W) and the e-Advance Rulings Scheme, 2022. The Finance Act, 2026 makes NO amendment to any section of Chapter XIX-B. Rulings of the Authority for Advance Rulings are cited as the natural body of jurisprudence on this Chapter; Supreme Court and High Court decisions are flagged as such; there is virtually no Income-tax Appellate Tribunal authority on Chapter XIX-B (advance-ruling disputes travel to the High Court/Supreme Court, not the Tribunal), which is stated candidly rather than padded. Where a section has not been judicially construed, that is stated and the nearest governing authority is given. Citations are stated as reported and have been web-verified; the reader should consult the official report before filing. This material is for professional reference and is not legal advice.